Pizza and beer are complements. The price of beer increases. What happens to the market for pizza?
A. Equilibrium price falls; equilibrium quantity rises.
B. Equilibrium price falls; equilibrium quantity falls.
C. Equilibrium price rises; equilibrium quantity falls.
D. Equilibrium price rises; equilibrium quantity rises.
Answer: B
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Consider a closed economy without the government. If the GDP of the economy is $63,000 and the consumption in the economy is $45,000, the savings rate in the economy is:
A) 35.75%. B) 28.57%. C) 16.86%. D) 24%.
Use the classical (RBC) IS—LM—FE model to show the effects on the economy of a temporary adverse supply shock; for example, an increase in the price of oil
You should show the impact on the real wage, employment, output, the real interest rate, consumption, investment, and the price level.
Suppose a basket of goods and services has been selected to calculate the consumer price index. In 2005, the basket of goods cost $108.00; in 2006, it cost $135.00; and in 2007, it cost $168.75 . Which of the following statements is correct?
a. Using 2005 as the base year, the economy's inflation rate was higher in 2007 than it was in 2006. b. If 2007 is the base year, then the CPI is 33.75 in 2006. c. If the CPI is 156.25 in 2007, then 2005 is the base year. d. Using 2005 as the base year, the economy's inflation rate for 2006 was 27 percent.
Until the 1940s economics tended to focus on deductive reasoning. This can be attributed to the:
A. laissez-faire approach to the economy. B. lack of computational power to analyze data. C. fact that inductive reasoning was viewed as obsolete. D. lack of quality economists.